A Quick Interview of Me, By Me, To Catch Up With Everything Amazon

A: Fair enough. Aside from the fact that the largest online bookseller is continuing to refuse to sell my Tor novels, everything is fantastic. Thanks for asking.

Q: Have you seen some verifiable drops in sales from Amazon’s actions?

A: I had a friend check BookScan for me, it having a tally of my sales through about 70% of the nation’s book retailers, including Amazon. This week six of my seven Tor titles are down in sales, in percentages ranging from low single digits to 30%. Whether those drops are attributable to Amazon’s actions directly is an open question, but I suspect at least some of it is. On the other hand, Zoe’s Tale is up 8% from the previous week. Go me.

Q: How are you feeling about Amazon at the moment?

A: Frankly at this point I’m simply puzzled. It’s been seven days since it yanked Macmillan titles, and five days since it announced that it knew it would eventually have to accept Macmillan’s terms. So that’s five days that Amazon has been punishing a whole range of authors to no particularly good or useful end. I can understand if not condone yanking titles as a negotiation tactic, but when you publicly say you’re going to give in, the major point of your negotiations is done, isn’t it? Everything from that point forward looks like a temper tantrum, and I don’t see how that’s useful in Amazon’s relationships — with its vendors, with authors, with shareholders or with the public, which still can’t buy everything it wants from the store and is realizing it has to go elsewhere for it. In that respect, I imagine other retailers want Amazon’s snit fit to continue, because it’s good for them.

Q: Do you hate Amazon?

My Amazon Prime account suggests that I really don’t. But, you know, look. What this is about to me, and what it’s always been about for me, is the fact that Amazon is punishing authors — a lot of them — for something that fundamentally doesn’t have anything to do with them, that being top-level trade negotiations between two corporate entities. Amazon can choose to do whatever it likes under the law, but admitting “Amazon has a right to do this” doesn’t mean I can’t say “and it’s being dicks to a lot of innocent writers” as well. Both statements are true. As for me, it’s pretty simple: When Amazon reinstates the “buy” buttons to all the Macmillan titles it’s stripped them from, I’ll consider buying something from it again. Until then, I’m taking my personal business elsewhere. I’m not suggesting others have to follow my example. But this is where I’m at.

Q: What do you think of the argument that Amazon is doing consumers a service by fighting to keep eBook prices at $9.99?

A: Leaving aside the fact that eBooks more expensive than $9.99 were already for sale on Amazon before all this, I think Amazon has done a fine job convincing Kindle owners and fans of eBooks that it’s leading this epic struggle for $9.99 for their benefit, and that’s the one PR victory it’s had in this. But I think it’s also not telling the whole story, which is that if Amazon wins the argument that $9.99 is the correct price point for eBooks, than all eBooks will likely be $9.99. Which is to say that if publishers can’t make money above that price point, they’ll recoup it from below. As it happens, my Kindle books all sell — well, sold – for less than $9.99. I’m not entirely convinced, if Amazon has its way, that their cost wouldn’t migrate upward in the aftermath. Amazon has done a fine job of making all its partisans focus on the idea that $14.99 eBooks might be on the horizon; it’s sort of skipped over the idea that $5.99 eBooks might be going away.

Also, you know. I think it’s kind of funny Amazon can initially sell the Kindle at $400, and then eventually drop the price to $259 when it makes sense for Amazon’s business to do so — and yet appears to maintain that the content for the Kindle has to have a single price point.

Q: But some folks say that will never under any circumstances buy an eBook for $9.99.

A: That’s fine with me, just like people only wanting to pay paperback prices is fine with me. I just don’t think there’s a problem in seeing if some people will pay more first. I see a lot of people maintaining the market won’t support eBooks above a certain price point, but the fact some of them also seem militantly unwilling to let the market actually try is a bit weird to me.

Q: There are also people who want to boycott Macmillan and its authors for this.

A: Well, if they own a Kindle, they don’t have a choice whether to boycott or not, do they? Amazon’s already made the choice for them. If people want to personally boycott a publisher or author, that’s one thing, but a retailer using its control of a sales channel to enforce a boycott? Insert your own totalitarian allusion here.

Q: How do you respond to the belief that you’re just a Macmillan sock puppet in this thing?

A: I think it’s kind of funny. To be sure, I make a lot of money from Macmillan (and it makes a lot of money from me), and I’m both fond of the people I work with at Tor and generally happy to be published with them. I have a history with them. On the other hand I have a history with Amazon, too: Folks might recall the METAtropolis audio anthology, which I edited and wrote for. Its original publisher was Audible, which is owned by — anyone? Anyone? It’s owned by Amazon. And you know what, I made a lot of money from that, too, and I’m fond of the people I work with at Audible and am generally happy to be published by them as well. Likewise, I’m also published by Subterranean Press, by Penguin and by Baker & Taylor. The lesson here is that working writers have a lot of business relationships.

I can understand why people want to accuse me of being a Macmillan sock puppet, since my own philosophical stance and personal concerns dovetail into Macmillan’s separate concerns. And if it makes people happy to think that, fine. But out in the real world, it’s me speaking my own mind. It’s not like Macmillan folks are telling me anything more than they’re telling anybody else. I have to scrape for rumors like a common troll.

Q: Well, I think that about wraps up my questions. Anything else you’d like to say?

120 thoughts on “A Quick Interview of Me, By Me, To Catch Up With Everything Amazon”

Why do you continue to (by your statements, at least) ignore what the real issue appears to be?

Either you honestly believe that it’s about Amazon deciding ebooks must be sold at $10, or you are misinforming people.

I also find it interesting that what you seem to be upset about is Amazon selling physical books exactly the way Macmillan has decided they must sell ebooks: as an agent, only, taking a fixed percentage of a price they don’t set. Perhaps Macmillan should start become an Amazon reseller.

I had a truly bizarre email exchange with Amazon the other day – I wrote explaining I had wanted to buy Kage Baker’s Company series of books but that Amazon didn’t seem to be able to sell it to me, I pointed out that I was taking my business to bookdepository.com. Customer service wrote back suggesting a better search term to use to find the books but didn’t notice I could only buy 3 of the series second hand from Amazon.

On another note I won’t buy an e-book at any price until it becomes mine on purchase as opposed to leasing it from Amazon (or other provider)

I canceled my pre-ordered SGU DVD with Amazon (I’m getting it elsewhere now) and gave the following reason for my cancellation.

“I am not happy with your treatment of the Macmillan authors by not selling their books. As many of my favorite authors are published by that company or their subsidiaries, I will buy from companies that don’t punish the authors while negotiating with the publishing company.”

I don’t buy books from Amazon anyway. I prefer going into bookstores going through the shelves and if necessary have something ordered and shipped to the store if I can’t find it. That being said, the majority of DVDs I own have been ordered from Amazon, but not anymore.

In my experience, anytime the idea of a magic price point for books comes up, my BS meter starts to smoke and emit sparks. The magic price point for humor books (my area) is supposedly $14.95. Except when it’s not. Except when someone’s gut tells them it’s not. (There are too many examples of list.)

Let the market set the price. A new ebook’s price should be at least comparable to that of a hardback, then be brought down over time, in the same way that paperbacks provide a cheaper alternative down the road. Books aren’t Hollywood blockbusters–they can actually have a long life, and don’t need to make the lion’s share of their profits in the first weekend of release.

It seems incomprehensible to me that anyone who’s ever looked at this blog for more than 14 seconds could instantly tell that Scalzi may be many things, but a sock puppet for some corporate concern is not one of them. There are certainly more opinionated and independent thinkers out there, but I, for one, can’t name them.

“Why do you continue to (by your statements, at least) ignore what the real issue appears to be?”

By which you mean to say “Why do you continue to ignore what I, Sean Eric Fagan, think the real issue appears to be?” To which the answer is: Because it appears that what you think the real issue is and what I think it is differ. Please deal with the concept that this is a multi-faceted issue and different people may choose to focus on it differently. Beyond that, unless you wish to provably explain how you have some sort of insider knowledge the rest of us don’t regarding the high-level negotiations between Amazon and Macmillan, your opinion of what the real issue is is just that, your opinion.

Minor quibble here – if Macmillan sold ebooks that were DRM-free, then Kindle owners wouldn’t be forced to boycott. Just like I bought about fifty dollars worth of ebooks yesterday, not through Amazon. So the Macmillan boycott is at least partially forced by Macmillan itself, for Kindle owners.

We have Amazon being willing to pay a wholesale price for ebooks, just as they do physical books. Now, Amazon have demanded lower wholesale prices for them, but they have demanded lower wholesale prices for physical books as well, and always have. Amazon then sold those ebooks for a price of its choosing. Typical retail setup.

Then we have Macmillan, who have countered by saying that Amazon will only be allowed to sell books at a price that Macmillan decides, at a flat 30% commission, with all costs coming out of whatever profit Macmillan deems is acceptable.

Perhaps you can explain why you think Macmillan’s chosen behaviour, which stands a good chance of killing Amazon’s current business model and eventually forcing them to exit the ebook business, isn’t really the reason why Amazon have decided to use the only leverage they have.

I know you’re generally a smart person, so either I’m missing something, or you are.

“Sell ebooks”. Sorry about that. Although perhaps you could explain why Amazon shouldn’t worry about that happening, too. (Or even offer evidence that it hasn’t. I have no evidence that it has, of course.)

JFG@6, ebooks are that way, traditional physical copies, not so much. Go to one of the chain bookstores, whichever is closest to you, and look at the new paperbacks that come out every week. Find a few from authors you’ve never heard of, note them down.

Now, come back in 6 months. The odds are that none of the books on that list will be in stock. More than likely they didn’t completely sell out, and were destroyed.

I think that this is at least part of the problem, Macmillan is still in the mode of ‘if it doesn’t sell in a couple of months, we make nothing on it’. Which, to be honest, if ebook sales are currently as small as several authors are claiming is probably true still.

What Amazon missed in all of this was ‘don’t tick off a bunch of folks with a bully pulpit and a large audience’. What Macmillan missed was ‘don’t tick off your largest and best customers’.

When you think about it, it is similar to the fights Compaq and Motorola had with their distributors about 7 -10 years ago. They tried switching to direct selling to consumers instead of through resellers, but they had these huge reselling networks already built up that they depended on. There were real rows over it, and both sides were worried they were going to disappear if they didn’t find a way to change.

When ebooks take off eventually, it will kill the book resellers, because unlike distributing a physical product fast and cheaply to consumers, you can deliver information to the consumer in seconds. And inventory costs are pretty low, comparatively (until you want to upgrade your database software at least ).

Actually one thing resellers might have is information on consumers and their buying habits, for targetted advertising. That might indeed prove to be their biggest asset, and the one thing that might save them.

In short it’s more than just whether to pay more for ebooks, it’s the entire publishing model. Macmillan is trying to hold onto the old model (a strategy that didn’t work for the RIAA or MIAA), Amazon is trying a new model (probably won’t work either, since it relies on a closed system). The model that will work 100 years from now won’t be either one.

I must admit at first I focused on Macmillan’s pricing being foolish and old fashioned. But now I am getting tired of not even being able to buy old books. Well I CAN, it is just a few more hoops. (plus i have a gift certificate I’d rather use :) ) I wrote a letter to Amazon asking them to just put the darn books back and let the consumers decide.

” But I think it’s also not telling the whole story, which is that if Amazon wins the argument that $9.99 is the correct price point for eBooks, than all eBooks will likely be $9.99. Which is to say that if publishers can’t make money above that price point, they’ll recoup it from below. As it happens, my Kindle books all sell — well, sold – for less than $9.99. I’m not entirely convinced, if Amazon has its way, that their cost wouldn’t migrate upward in the aftermath. Amazon has done a fine job of making all its partisans focus on the idea that $14.99 eBooks might be on the horizon; it’s sort of skipped over the idea that $5.99 eBooks might be going away.”

It seems pretty clear that 5.99 ebooks were going away anyway. There is little reason for the big six to do anything but charge the most for what they sell for all titles. The head of Macmillan recently said this:

“Despite being in charge of one of the largest publishing conglomerates in the world, he’s pretty pessimistic about the future of books. Challenged by Wired editor Chris Anderson to use digital distribution and new business models to attract new readers and expand the book market, Sargent is in full rejection mode:

“As the Internet grows, as all the other types of entertainment grow, it’s hard to imagine sitting here how we are going to convince everybody in this room to spend an extra six hours every week to consume another book. So in a way, if you look at the overall demand for books, it’s pretty hard to make that grow. We’ve tried. A whole bunch of people worked very hard to try and grow that. It’s pretty hard if you look at the demographics, how people read, to actually convince yourself that we have a growth business in books.””

If you believe you are in a contracting market that you cannot grow, then your only incentive is to take as much profit out of that market before it completely dies.

Look, Amazon is hardly full of angels and fluffy kittens, and I am not trying to excuse their behavior since the weekend. But at the end of the day, there are two ways to screw customers, Amazon’s and Macmillan’s. Amazon’s has the potential to lead to a monopoly of ebook control under one retailer which causes all sorts of problems. I don’t think that is likely, with the entry of Apple and B & N into the field as well as Sony’s presence.

Macmillan’s model of control the retail experience pretty much ensures that there will be much less competition in the ebook market, that prices will remain higher than a true market can make them and that no one will be allowed to innovate the retail experience in a way that Rhapsody or Netflix or something else that I am not clever enough to think of has or will. And that leads to a stagnate market with probably less choice for consumers and perhaps even the death of ebooks.

I think , especially since Murdoch is gleefully jumping on board, that this is the more likely future than the one where Amazon has a de facto monopoly.

One thing is going to be interesting, and by that I mean Chinese curse interesting. In five to ten years when ebooks are the dominant versions sold, I suspect you’re going to see a number of the really big guys do exactly what John’s strawman in the last post suggested, which is hire an editor, commission some art, get someone to do the typesetting, etc., and completely bypass the publishers, and get the 70/30 split themselves. At which point the profits from these are no longer going to subsidize the lesser selling works, or speculative things.

John, are you ignoring the concept that I can purchase non-Amazon ebooks and read them on my Kindle as long as they are in a format that I can transfer to it? (I believe that’s pdf and a couple of others)

I mean, that doesn’t mean I HAVE to boycott because Amazon has chosen to do so, right?

I have already decided that I won’t be buying books from Amazon.com again. They are hurting authors I know and like and that ticks me off.

I’m not into the whole boycott Amazon in toto thing, because last time I checked, Macmillan doesn’t sell computer software or toasters. If they do decide to start selling those, I’ll reconsider my stance.

So, how many published writers out there under contract with Macmillan (or any of the others, really) are on the phone with their agents telling them to diversify with respect to the available publishers? You know, the old “don’t put your eggs in one basket” adage? I know this is probably unrealistic, but think it can be a wake-up call, too. One series/book with one publisher, another series/book with another, etc.

Back in the 90’s I worked for a small software firm whose revenue was gained through a single client. When that client decided to stop using our services, we were screwed. The company more or less went out of business after that. There’s some parallels with this whole mess, I think.

Got it. Sorry – hadn’t waded through all the previous comments. Thanks for doing the work and pointing me to it.

I guess the kind of person who would be aware enough to realize that this is happening in the first place (ie: me) would be more likely to try to go around Amazon’s ease-of-use to support people she likes.

First, I think it’s obvious I disagree with you on the issue. Second, I hope it’s also obvious that I, at least, don’t think you’re a sock puppet simply because you’ve chosen a different monolith to support.

Finally, I understand your repeated assertions that this is hurting a set group of artists, as it most certainly is. I contest the implication that a) Macmillan isn’t partially to blame for this (wholly to blame, I assert) and b) that Amazon isn’t also hurting Macmillan, it’s intended target.

If Macmillan succeeds in being able to dictate what Amazon charges, we’re all screwed, that’s all I’m saying.

Look, I’m just a reader. I’ve used Amazon for years and have favorite authors from all the publishing companies. I’m grateful to John Scalzi for covering this topic on his blog, and I generally agree with him, but I believe we all gain something by seeing all points of view.

The problem is, this topic has been discussed extensively on this blog since last Friday 1/29, starting here.

I’m sure you feel have something worthwhile to say, but trust me, 99% of it has already been brought up and dissected.

Clearly you are putting time and attention into writing your comments. Don’t you think it would be a more efficient use of your time to actually read what people have already said over the past week? If you do so and still comment, imagine how impressed we will all be to hear something new!

Another point that I haven’t seen mentioned is how this embargo can have an even longer term impact. If Macmillan titles come up with a big fat 0 for past sales, then how long before they’re flushed out of all the top seller lists, customers who bought this also bought this, customers who added to their cart also added this? The longer Amazon waits, the more of an impact this could have, which might be playing into the delay. It seems that while Amazon said it would cave, the negotiations must still continue.

Big selling titles will probably pop back up pretty quickly once Amazon turns the buttons back on, but what about all of the smaller backlist titles? Macmillan authors will likely need an extra boost even after the buttons for their books are turned back on.

Skip: I suspect you’re going to see a number of the really big guys do exactly what John’s strawman in the last post suggested, which is hire an editor, commission some art, get someone to do the typesetting, etc

Some might, sure. But what – apart from existing contracts, and even they get renewed – has stopped the really big sellers doing that before now with print? Why do you not see people who won’t break too much of a sweat if they don’t sell financing their own books in whatever format and price they want? What is the significant change with eBooks that suddenly makes Dan Brown a self-publisher? That makes Yog’s Law obselete?

Well, the embargo is double edged, however, in that the longer Amazon doesn’t stock titles customers want, the more they learn to go elsewhere for the title. So Amazon’s making the gamble that they can hurt Macmillan before they can hurt themselves.

I’m not sure if this point has been made elsewhere, but I’ve discovered that the Barnes and Noble prices for members most times beat the Amazon price anyway. Additionally, the free shipping starts at $10.00 purchases and it is faster than Amazon. Maybe this will hurt Amazon in the long run as people discover that there are other, better outlets for books.

Since I’m usually way behind the curve on most things, someone has probably already suggested this, but what Amazon might be doing is warning other publishers. Amazon is showing what can happen if you back them into a corner. In effect saying, “Macmillan can survive this, but can you”?

I’m sorry that authors are getting hurt in this fight, but it’s not all on Amazon. Macmillan is willing to let their authors get hurt in their effort to control their e-book prices. Maybe Macmillan didn’t think Amazon would fight back, but they know now. Both companies are looking out for themselves, and authors are as John said just collateral damage.

I think Amazon is worried that if McMillian increases its prices so will the rest of the publishers. So Amazon is making an example out of McMillan. I don’t think Amazon cares that it is punishing authors or even looks at it that way. I don’t think they care about you at all.

What I find interesting is that none of the other publishers are pushing for higher prices. I would think that now is the time to do that since Amazon would have a hard time pulling the buy button from a 2nd large publisher. They may be afraid that they will and are sitting on the sidelines to let this play out.

If I was published by McMillan I would be mad at them also. They are playing corporate games with amazon that is hurting me. They are not working in my best interest as an author. Yes Amazon pulled the buy button, but they did not do this to any other publishers. Most authors make most of their money by far from non-ebooks. If I were you I would call other TOR/McMillan authors and get them to together threaten to take their publishing business elsewhere in the future.

People who are complaining about this agency model being abhorrent don’t have a clue how retail works. Items are sold through all sorts of different models and agreements, such as consignment, holdbacks, and agency. Ever wonder why a PlayStation 3 is $299, everywhere, even Amazon? By having a level price everywhere they indirectly support local shops that sell videogames as well as BestBuy.

My wild guess on why Amazon is taking their time to relist is that this whole delisting thing was done by entering “delete from inventory where vendor=’macmillan'” and now they have to go back and re-inventory the books (!) to add them.

“Yes, and this is precisely why all my ebooks on Amazon were selling for $9.99 or less. And on Bn.com, too!

No, wait.”

Your contention was that Amazon’s victory would mean that the 5.99 book price was doomed, eventually. My contention was that since people like the heads of the publishing houses, or at least Macmillan, don’t see lower prices or the savings digital distribution without returns as a way to grow the industry because they don’t think it can be grown, this push to control prices is about raising them everywhere in order to capture as much money from a shrinking market as they can.

In fact, the agency model gives them much more ability to do that, especially is if becomes the standard method of selling ebooks, which I suspect it will be. These people appear, based on their public statements, to thinks that books are both under priced and a declining market. In that environment, I don’t think it likely that timely variable pricing will materialize or that its bottom will be lower than today’s.

Serious question for our beneficent host: I just realized that Zoe’s Tale would be a grand Valentines present for The Nephew. Does it make a difference on your end of things if I order it from Powells.com or walk into the Barnes and Noble next to my local Trader Joe’s (which marketing genius came up with that store location, I wonder)?

My local independant bookstores rarely stock much new YA fiction. I might be able to get that title at the not-Walmart megalomart where I buy groceries, clothing, and Dremel tools, but their stocking is undependable and tends toward The Brazillian Billionaire’s Bride sorts of thing, and a solid eight foot case of the works of Stephenie Meyers. The days when the grocery store had groceries and no hardware but did have a well stocked magazine and book case from which I eventually purchased the complete works of Agatha Christie are long past.

Correct me if I’m wrong, but isn’t Amazon asserting a right to sell e-books for 9.99 even if that’s less than the wholesale price? Arent’ they using e-books as loss leaders to help sell Kindles? I can’t see what’s so bad about that.

I agree with you that Amazon’s response to Macmillan’s threat of witholding new titles is petty and hurts the wrong parties. It’s no excuse, but isn’t Macmillan’s threat also misguided?

Sean Eric Fagen:
If you really want to get into publishing models, and the back-and-forth between the industry giants, you might enjoy Charlie Stross’ post on the matter. Declaring it to be the ‘real issue’ is a bit narrow minded. Sure, it matters to Amazon and Macmillan, but here on the ground with the authors and readers, I think John’s post is summing it up quite nicely.

What I find interesting is that none of the other publishers are pushing for higher prices.

News Corp Chief Rupert Murdoch, who oversees a media empire than includes HarperCollins books, home to authors like Michael Crichton and Janet Evanovich, made clear on Tuesday his displeasure with the low price Amazon.com Inc has set for electronic books.

I don’t understand how “Macmillan is willing to let their authors get hurt” if Amazon made this delisting decision without warning (which it appears they did), and continues to maintain the delisting even after it and Macmillan have purportedly agreed on terms (which also appears to be the case now). There’s no place in that chain of events in which Macmillan made any decision to allow or prolong delisting.

Meanwhile, the interesting question is why the delisting is still being maintained. I’m rather inclined towards my wife’s theory that Amazon didn’t remove the “buy” buttons in as reversible a way as they thought they had, and is now having a nice little database-recovery nightmare trying to fix it.

I think the Amazon/McMillian spat is childish negotiating on both sides. I want to read Scalzi’s books no matter what. Given that – Amazon pulling Tor books isn’t going to hurt JS, he’ll still get his small portion one way or another.

On the other hand, JS and McMillian will be able to tell how many books Amazon sells of theirs.

Claiming Amazon’s actions are hurting authors is disingenuous as those that want to read will find a way to buy their books. Amazon’s big mistake was forgetting that authors are literate, vocal and obsessed by the Amazon sales numbers.

The discussion of electronic vs. paper copies is laking honesty too; it’s not just the cost of printing and paper, it’s the transport and storage, shelf space and retail staff costs etc that eBooks should be discounted from the “normal” paper price. That’s not including the 25% resale value for used paper books that eBooks do not have.

Publishers are a necessary part providing editing and marketing but there are lots of places in the supply chain that should go away with eBooks.

Given their past techno-flubs, it wouldn’t surprise me. Given that they NEVER actually come right out and admit, in a remotely timely fashion, what it was that went wrong, I also suspect that we will never actually know why the delisting is still going on.

Never.

And I’m kinda tired of dealing with a corporate entity who is so very bad at hiding their evil. I can tolerate a little well played evil, but when you can;t even do evil well…. it’s hard to respect an organization that can’t even be good at being bad.

Enh, not quite as funny as the play, but not bad. You’re definitely still in the zone.

Kevin — he wasn’t saying that the book business can’t be grown and is shrinking. He was saying that they couldn’t grow it beyond the percentage of growth it already has. Book publishing has always been, and will always be a low growth, narrow profit margin industry. E-books potentially brings in new readers, but it’s still going to be only a small slice of the populace relative to other industries. So what he’s saying is that the cost of expensive alternate sales systems and trying to turn themselves into a tech company — what to compete with Apple? please — is not going to produce a big jump in the rate of growth and therefore isn’t worth even attempting. Not that it would work anyway. Whereas the people at Wired, who live in the tech world with all that bright shiny money and venture capital, keep thinking book publishing can magically transform itself into, well, Apple. It’s not realistic when you look at books in the wider market.

David: “Correct me if I’m wrong, but isn’t Amazon asserting a right to sell e-books for 9.99 even if that’s less than the wholesale price? Arent’ they using e-books as loss leaders to help sell Kindles?”

No, it’s waaay more complicated than that. The big problem is not that the two companies were arguing over retail models, revenue split and price and threatening one another, but that instead of just making a threat, Amazon decided to shoot the hostage right there. It was childish and it lost them leverage.

There’s a flaw in Mr. Stross’ argument. He opines that, the fixed prices that Macmillan is pushing for in the agency model will ultimately lower since costs will go down in the epublishing mode. He’s wrong. Just my opinion. If everyone is used to paying $15 for a new book, there’s no incentive for a publisher to ever reduce that just because costs go down. The only result from reduced costs is greater profit, and only for them. The rest of the chain, Amazon and reader, sit at a fixed price point forever. His analysis relies on a benevolence that Macmillan has in some instances rejected already. One has only to check their non-Amazon enforced pricing on ebooks where existing paperbacks are in print…it’s double the cost of the paperbacks.

From what I can tell, despite Amazon’s note that they would have to capitulate, there has been no actual agreement. The last time there was any real news about the situation, after the note, Macmillan said they were talking to Amazon. Since then, both sides have gone completely quiet about the situation.

I want them both to stop fighting. I want Amazon to let me buy those books again, and I want Macmillan and the other big publishers to stop fighting ebooks tooth and nail. I recognize the latter is unlikely to happen, though.

I’m frustrated by finding so many older sci fi books only in trade paperback and the higher price that results. I bought The Moon is a Harsh Mistress for my son for Xmas – $15.95. He gave copies of Bujold’s Young Miles to all his friends and I had to buy them used. Not only was it only available in trade for $17, but my local book store couldn’t get in enough copies from the distributor. (At that price I wanted as much of the money as possible to stay in town.) I dunno…this does not seem to be in the best interest of the authors, either, as Ms Bujold did not collect royalties on those 8 copies of her book. What this has to do with current discussion is that it makes me sympathetic to the guy who offers me the best possible price now. That said, Amazon picked an awful method to fight this battle.

Correction: So, I see Old Man’s War is available BUT “This is a bargain book and quantities are limited. Bargain books are new but could include a small mark from the publisher and an Amazon.com price sticker identifying them as such.” Prolly not back to regular sales – sorry.

Yes, the embargo is very much a double edged sword. There is another difference though. Amazon, over the short term at least, knows exactly how much this is costing them in lost sales, probably by the minute. Who knows? They may even be making more money as I think their margins on second hand books are higher than on new titles. Macmillan likely won’t know the full impact for some time.

Amazon may in the long run hurt themselves though. A whole lot of us are taking a second look at other online book sellers, realizing the nasty implications of this concentration of online book power. I revisited BN.com again and love how clean their site is. Amazon’s site has become so littered that it’s often difficult to find anything (though I’m sadly addicted to two-day Prime shipping). Really I should just get out of the house and into one of the great independents around where I live.

Tuesday evening, I found myself looking forward to a long, sleepless night of tending to my husband and son (they had a sever stomach flu). Not having heard anything about this Amazon situation, I went to get a new book for my Kindle app on my iPhone, because frankly, that is what’s really awesome about the Kindle store — I can shop at any time of the day, housebound or not.

I was browsing to see what was available in Science Fiction, and I think they had a Hugo/Nebula section, and one of your books was listed among them? I’m not sure, it was late, but I know that Amazon’s site directed me to a section with one of your books in it.

I thought, “This looks interesting!” but when I went to buy it, there was no way to do so. I was probably more confused than irritated, but now that I’ve had a chance to catch up on the news, I’m pretty angry about all the authors who may have missed sales.

Because I know for a fact that you missed one. And I’m sorry about that, and I’m actually about to go search for another place online where I can get it besides Amazon and I’m completely rethinking ever purchasing from them again, no matter how convenient they are.

Anyways, your blog was linked in one of the write-ups I read, and I thought you might want to know.

I’m doing what everyone else seems to be doing. Creating a plausible explanation based on very little evidence. Macmillan gives Amazon an ultimatum to either become their agent or get e-books delayed. Amazon delists Macmillan books both to punish Macmillan and warn other publishers.

Under this scenario, Macmillan bet that they had the upper hand, and either didn’t anticipate retaliation or was willing to risk it. After Macmillan became aware of Amazon delisting their books, they could have given in to Amazon for the good of their authors, but they didn’t. In other words, Macmillan was willing to let their authors get hurt if it gets them control of e-book prices.

Abbie Normal, there are midpoints between immediately giving in to Amazon and letting them keep MacMillan author’s books delisted forever; it’s quite possible that there’s a degree of risk being taken here that a week or so without Amazon will lead to greater consumer awareness of other sources which will then be able to compete better with Amazon and forestall its absolute dominance over the retail book market.

“he wasn’t saying that the book business can’t be grown and is shrinking. He was saying that they couldn’t grow it beyond the percentage of growth it already has”

KatG

I think that is a strained reading of what he is saying, but even if we grant that, I don’t think it changes much of the argument. Since the market cannot be grown faster than it grows already, then the major incentive is then to soak as much of it out as they can without stifling the growth. It puts only a minor check on the get as much as you can now mentality, I think.

The idea that publishers need to become tech companies is not, I think, evident in this discussion or in the idea of ebooks. Publishers can adapt to new technology — much in the way they adapted to JIT inventory techniques (which, actually, they may or may not have. I am not in a position to say) or nearly instantaneous sales figures or more efficient computer aided markup and layout etc — or not. But producing ebooks and taking advantage of that new model no more requires them to become a technology company than taking advantage of warehouse inventory software does. And I don’t think anyone there was suggesting otherwise.

I think the Amazon/McMillian spat is childish negotiating on both sides. I want to read Scalzi’s books no matter what. Given that – Amazon pulling Tor books isn’t going to hurt JS, he’ll still get his small portion one way or another.

On the other hand, JS and McMillian will be able to tell how many books Amazon sells of theirs.

Claiming Amazon’s actions are hurting authors is disingenuous as those that want to read will find a way to buy their books.

er, you did read the post, right? It uses these pesky things called facts to directly contradict your flight of fancy that pulling authors’ books from the largest online bookseller in North America won’t have an effect on sales:

A: I had a friend check BookScan for me, it having a tally of my sales through about 70% of the nation’s book retailers, including Amazon. This week six of my seven Tor titles are down in sales, in percentages ranging from low single digits to 30%.

While our interviewee did later note that Amazon’s precise role in that drop isn’t something that can be separated out, I think it’s reasonable to say that Scalzi is, in fact, being hurt by this. That he can weather it is a good thing due in part to other sources of income and good planning by the Fearsome Yet Beautiful Kristine.* Many authors aren’t so lucky.

All I can say to most of the rest of you is that you’re rehashing points made and addresses in earlier threads which it might behoove you to read go read.

Unfortunately, while Macmillan may be taking a risk, any loss of sales is still going to hurt authors. I just read John Sargent’s letter, and he seems to be saying exactly what I’ve proposed. Macmillan’s new business model is what matters. While he gives a thanks to authors for their support, does it really matter if they support Macmillan or not? As he said, “Macmillan and Amazon as corporations had our differences that needed to be resolved.” Authors are just along for the ride.

Amazon has a section where they take comments. Here is what I sent them:
===
I’m writing to inform you that due to Amazon’s petulant and childish attitude toward dealing with Macmillan, I will discontinue my Amazon prime membership at the end of the current period. I will also seek out alternatives to Amazon in future purchases. I understand you have a choice to make when dealing with business partners, and I have one to make when dealing with retailers. You’ve made yours, and I’ve made mine.

There are many reasons why I don’t do ebooks – from the Olde Fart point of the dead tree version being more comfy to the objection to giving somebody else control over my ability to read what I already bought. Ebook pricepoints are not a big factor in my take on this then.

As was stated above, Amazon has already shot the hostages. Not only that, they are trying to choke to death the people who produce the very product that they, Amazon, sell. What, these twits are arguing about a pricepoint for a resource that they are trying to engineer a shortage of???

Arguing about pricepoints in the current fiscal mess is dumb. The data is stressed and the answers won’t remain valid for long enough to be useful. Grabbing bystanders and putting them up against the wall just to show how tough your negotiating stance is = teh dumb. These people are only showing what they think of their cash cows (er, customer base).

Again, I’m not invested in the arguments over the ebook issues. What I see from the outside, however, is that it is pretty obvious that one side here is operating, deliberately, in bad faith.

Yes, I’ve read everything JS has written about the topic and other authors too, and yes I’ve read all the repetitive comments. I’m not disputing the 30% drop in this weeks sales due to Amazon’s actions at all.

JS’s long term sales will be the same and he will be paid the same pittance eventually. Everyone who wants to read his books will buy their copy through other retailers. I know I will whether Amazon carries it or not.

I doubt that JS is getting paid weekly from royalties, so his income this week won’t be affected either. Most authors I know have very irregular income from book royalties and most do a good job at planning for that.

In the long run, the drop in this weeks sales will not hurt JS.

If you want to argue that newer, lesser known authors will be hurt because they will not be discovered though Amazon’s web site, then you
may have a point.

I happen to completely agree with Scalzi, and I’m just a reader (struggling to be a writer) who wants my books and wants them NOW!

I see that other people choose to view this as Macmillan’s fault and not Amazon’s. Or that perhaps it’s the fault of both that I’m not getting my books through my favorite preferred online option.

But to me all I see is Amazon as the big bad here. After all, all they had to do was protest Macmillan’s point on eBook sales and refuse to sign a deal. Going the extra step to then ban Macmillan’s print books from being sold through their site slaps of petty vengeance. Especially, as John pointed out, if Amazon already admitted leaning towards a future concession with the publisher anyway.

If I can feel this way as a mere reader, I would imagine my bewilderment and subsequent ire would only be magnified ten-fold if I were a published writer with works for sale through Macmillan’s subsidiaries.

John has a right to be upset at Amazon, because so far in this instance it is Amazon that has made the direct action to warrant his vitriol. There were other ways for Amazon to protest Macmillan’s sticking point without resorting to taking it out on the authors and those readers who support them.

@64 They could have delisted all of their ebooks. Since the negotations are for ebooks, and not for print books in general, I think the outcry would have been vastly smaller. Would this hurt authors? Probably. But not nearly as much as the loss of the print sales, and I think the authors would have understood the delisting of the ebooks in contention; there’d be grumbling and annoyance.

But, I think at least five of the big six will follow Macmillan’s lead, because it’s my suspicion that they have to do so to be involved with the Apple store; I think the agency model is a direct crib from the app store model, which at 30% is considered revenue neutral for Apple. Apple is interested in selling books as part of an overall media push for the iPad; it is not interested in dominating the book market or, imho, changing a successful model (appstore) in order to retail something for which it has no expertise.

I said this on Charlie’s blog as well, but will repeat: this is entirely opinion and guesswork; I’ve no further insider information. But Jobs implied heavily in interviews that there would be no price differences between other venues and the ibookstore, and there’s no other way that this could be done, imho. I think it’s possibly why Random House was not on board at iPad launch. Since HarperCollins has begun to weigh in, I’m watching for similar movement from at least four of the others. I’ve no idea what Random House will do at this juncture.

But I think it highly unlikely that brand new releases at significantly below-cost prices on Amazon will sit well with Apple, and that leaves the publishers two choices: things as they are now (which they haven’t been happy with, looking into the future), and the agency model, without which they probably can’t participate in the ibookstore.

Amazon or Apple.

Whether or not this is good for consumers, I can’t say.

But at some point one of the factors of a good business model was service; at this point, it’s all about the price. Lowest price. Amazon can afford predatory pricing to drive anyone else away from the market because it can operate at huge, huge losses. Bookstores can’t. I’m willing to guess that any start-ups can’t either.

The chains and the loss-leaders did drive a lot of independents out of business — not all, but a lot. Amazon hurts those that remain enormously. I work in an independent bookstore, and cannot tell you the number of times people have come in for an hour looking for recommendations because we’re great with those — and then ordered all the books from Amazon because they’re cheaper.

Clearly, my recommendations and time cost them nothing, and I guess they’re also supposed to cost the store I work at nothing as well, so from their perspective, it’s ideal.

But we can’t afford, and have never been able to afford, to compete on price.

In the agency model, the drive to differentiate a business is still there–but it is decoupled from price, which could be interesting.

This won’t affect the bookstore, because the deep discounting of actual physical books won’t change.

I don’t buy e-books. I like the feel of a book and I like reading books. I spend enough time staring at lighted monitors. I also don’t shop Amazon don’t like how they do business. However, to me e-book pricing comes down to this. A fair price is take the price of the hardcover and deduct the cost of printing and shipping. That’s the price point that is fair. That doesn’t even account for warehousing costs which we can use to cover bandwidth and data storage. I don’t know what this number is but that should be it.

“Amazon is punishing authors — a lot of them — for something that fundamentally doesn’t have anything to do with them”

Well….. so?

When has it ever not been so? It’s impossible to penalize a business without having some impact on their employees and vendors. You can’t boycott Bozo Motors without having an impact on the people who assemble their vehicles or sell them widgets.

More to the point, when you opt to see this as bad behavior on Amazon’s part and therefor drive business to B&N or Borders aren’t you penalizing Amazon employees? UPS and USPS employees when you go to the local shop rather than mail order? Where does the madness end!@????

Yes, Amazon employees and vendors have a little more flexibility than contracted authors do in how they react if Amazon’s fortune starts to falter, but that’s because of the nature of the publishing model they’ve signed on to. As someone upstream commented, how many authors do you think are on the phone to MacMillan reading them the riot act to resolve this?

I don’t doubt the real repercussions for authors as a result of Amazon’s actions but I just don’t see how you can expect anyone to think they deserve blame for this side effect unless we start applying that to every action everyone and every business ever makes.

If Amazon negotiates a better deal with FedEx and the result is that FedEx streamlines their operation and some people lose their jobs do we lay blame on Amazon for that? If Amazon comes up with an improved distribution method so they can do less shipping shall we blame them for Exxon’s decreased revenues because they use less gas?

If Amazon couldn’t manage a board to board shot (not being on either board I couldn’t say for sure), I would suggest a public warning that the tactic was under consideration and state that, if things didn’t change within a month, authors due to be effected should weigh in with Macmillan or have made alternate arrangements. Not using the authors as bargaining chips out of the blue.

One option would have been to do exactly as John suggested in a previous post (lousy at linking, sorry):

paraphrasing:

Tell everyone VERY publicly that you will pull Mac off the shelves at X time on Y day for Z reason. Frame the argument, give fair warning, let Mac know it’s coming and you mean business.

Me continuing the thoguht:

Heck, even make it a phased pull – first ebooks, then SCI FI, then mysteries, etc…. Or pull by house within MAC. That way Mac can see you’re serious long before you totally pull the plug, and the customers can see your actually giving very fair warning instead of pulling a petulent stunt.

They had plenty of ways to do this better. The fact is, they chose to do it poorly. They either actively rejected superior options, or those options never occured to them. One is petty, the other moronic. I don’t feel a need to reward either as a core business practice.

To all those suggesting that Amazon should have warned ahead of time, or just pulled ebooks or staged it imprint by imprint, all of that still puts authors in the crossfire.

All of those things would have been either less effective, more punitive to some authors, or nonsensical. Pulling ebooks to spite Macmillan for threatening to pulling their ebooks from Amazon would be the latter.

As for warning, I really doubt this was all that surprising to Macmillan. They have and are talking behind the scenes, and Macmillan is just as guilty as Amazon for playing chicken. Authors don’t get weekly royalty cheques anyway.

There’s really no bad guy here. Both Amazon and Macmillan are honestly doing what they think needs to happen to keep the industry viable. Both see the other as inviting catastrophe, and are thus (reasonably) taking harsh action.

No, it’s the industry reality of what he is saying. Whereas you were claiming that he was saying that books are dying off, which was incorrect.

“but even if we grant that, I don’t think it changes much of the argument.”

Wired’s proposal, which you were paraphrasing, is that Macmillan should come up with new ways to sell books, like a tech company, instead of dealing with technological issues in the current industry. Wired was proposing Macmillan be a creative tech company coming up with new tech solutions. Macmillan’s CEO was saying that this wasn’t a cost effective approach for them. So yeah, it is relevant.

You’ve got a lot of people who don’t even buy e-books most of the time saying that book publishing must completely reinvent itself or die while having no idea how the industry actually operates now. That’s not the same thing as “adapting” to new technologies — it’s a demand that book companies act like something they are more familiar with, and as such, the idea has little practical use. Macmillan is trying to adapt to new technologies by adopting a retail model used by many tech companies for electronic products, such as PlayStation. Whether it’s the best choice is not certain. It’s also not certain that all the other publishers will go with the same approach with every vendor. And it certainly isn’t a choice they make and then is written in stone and cannot be further adjusted or changed. But they didn’t pick it out of a hat either.

I went to my local independent bookseller yesterday and froze. I must bring a list next time so I can actually buy something.

This whole thing is just getting old. Amazon needs to relist all of these books and eBooks now and get over themselves. I knew going into buying a Kindle that the prices were going to go up. That does not bother me. What bothers me is Amazon taking that choice away from me. I’m not taking sides here, unless there is a side for the authors because they obviously are the ones who suffer from lost sales the most.

Michael Kirkland@77:There’s really no bad guy here. Both Amazon and Macmillan are honestly doing what they think needs to happen to keep the industry viable. Both see the other as inviting catastrophe, and are thus (reasonably) taking harsh action.

No, I’m sorry it is not “reasonable” for Amazon to engage in infantile douche baggery that 1) directly impacts the livelihoods of authors like Mr. Scalzi, and 2) affects their service, which one might naively think is the whole point of an on-line retailer.

It is possible to engage in tough negotiations with a supplier without childishly spite-fucking your customers and unrelated parties. Happens all the time. Amazon might like to try it.

I can’t figure out why people seem to think that minimizing the role of the middleman between the publisher and customer will somehow create conditions in which market forces no longer exist.

Also, most of this discussion doesn’t account for Macmillan’s other, equally important offer, which was to window the release dates – they’d schedule ebooks to be released only after the hardback has had a chance to sell. This takes away the core of the argument that this is about evil publishers trying to charge more than something is worth. They are trying to prevent a myopic retailer from killing the goose that lays the golden eggs.

As I said on my own blog. I don’t think Macmillan is right here but I think they have a right to try. I do think Amazon is being a bully and they are starting to piss me off (even though they like to claim they are fighting this fight for me which is total bullshit also).

It is time for Amazon to put the print editions back up at the very least. I own a Kindle. I love my Kindle but I have not bought a book from them since this started. This was not my intention when everything started but I suddenly find myself quite annoyed at how they have played this whole thing out.

Both companies should start acting like grown ups because they are hurting their families (Kindle owners & authors).

Michael Kirkland: “Macmillan’s offer was to window ebooks on Amazon, not in general. Which is no more tenable than Amazon’s current “windowing” of Macmillan books.”

Actually it is. Macmillan told Amazon that if Amazon was going to insist on continuing indefinitely the $9.99 price for bestselling and special deal titles (other Macmillan titles were sold by Amazon for higher than $9.99,) and also if Amazon was going to insist on their special enormous price discounts for e-books, and their right to a larger share of revenues as the producer for their Kindle platform — which was only necessary because Amazon insisted on it through DRM and other means — and increased fees for publicity services by Amazon on their site, etc., that Amazon would have to pay a penalty for getting the terms it wanted that are different from what other vendors get. Specifically, that those bestsellers would come to Amazon later as an e-book than the hardcover print versions, whereas other vendors, who didn’t insist on all of Amazon’s fees, discounts, special privileges and artificial depression of e-book prices to maintain their monopoly in the market, would get the e-book up front.

So that was a negotiating offer to Amazon that if they insisted on various terms, they would have to give up something in return, which is the sort of negotiation that Amazon does with publishers all the time. And Amazon’s threat that if they don’t get the terms they want without having to give up anything in return that they wouldn’t stock Macmillan’s titles was also a perfectly fair negotiating offer.

But what Amazon did that crossed the line was then take their inventory of Macmillan’s titles and hold them hostage in their warehouses. Which, if you know anything about the returns/consignment system for print books, was not kosher for much of that inventory. Macmillan could in fact sue them over it, which is probably why Amazon capitulated so fast when Macmillan wouldn’t back down and when Macmillan started speaking to the media. But they are taking their own sweet time to restore the listings, either due to tech problems or to be nasty or both, which shafts both authors and customers.

I can understand that Amazon thought they’d try it as it had worked with Hatchette (UK rules may be different which may be in part why the move was more effective then.) But what it shows is that Amazon is becoming increasingly difficult and wild as a company for suppliers, not just publishers, to try to work with, maybe because it is trying to expand in too many directions too fast (a situation that got it into financial trouble in the late 1990’s.) And that has bigger implications beyond e-books. Amazon has been an effective company and I’ve had decent service from them. But they seem to be getting increasingly erratic in their business practices as they lose some of their market share, and that worries me.

And what Amazon did was not an acceptable business practice and if they’d tried it with other types of companies like clothing, etc., it would have gotten a lot nastier.

Q: But some folks say that will never under any circumstances buy an eBook for $9.99.

A: That’s fine with me, just like people only wanting to pay paperback prices is fine with me. I just don’t think there’s a problem in seeing if some people will pay more first. I see a lot of people maintaining the market won’t support eBooks above a certain price point, but the fact some of them also seem militantly unwilling to let the market actually try is a bit weird to me.

Thank you. I know it’s not a direct analogy, but my partner thinks I’m mental paying up to NZ$80 for import Criterion Collection discs, when the same movie is available in vanilla R4 for a quarter (or even less) of the price. But it sure looks to me like Criterion has carved out a sustainable niche servicing cinemaphiles who are will to pay a premium for releases with pretty damn impressive picture and audio transfers, and extras that are more than an EPK and a couple of trailers.

OTOH, although I own a BluRay player I still tend to go for DVDs unless there’s some seriously tasty exclusive content involved, and probably still will until BluRay prices come down a bit.

I do not understand the hostility toward John Scalzi in these blogs. I think the criticism is from shallow self centered people. This issue is about really small 1 person businesses having their livelihoods threatened as pawns between 2 large corporations.

The responses I see are

1. I have a kindle you suck. I want $10 books. What does this have to do with anything? These guys livelihoods are threatened. If the books are too expensive don’t buy them and check them out of the library. Shallow and self centered.

2. The publishing model sucks anyway: Blah, blah. Your an idiot. Don’t write a book then or self publish it yourself. What does this have to do with anything?

John: Your site is infected with idiot liberals who don’t understand business and think they are entitled to $10 books. No conservative would call you a communist for your posts. You are a business person. We get that.

Your posts on the publishing side of business are very well written. I will have to make you an honorary member of the club for growth.

Did Macmillan let authors know what Amazon was going to do? Does anyone here really think that Macmillan didn’t know about this way ahead of time? I’d bet that Macmillan knew the exact second this was going to happen as it was probably given to them in the form of a deadline.

Macmillan is inflicting pain on Amazon to get the best deal and Amazon is inflicting pain on Macmillan to get the best deal. Both have probably rationalized to themselves that it’s better for the world for their side to win.

I do find it highly amusing how many posters here are acting like Amazon is doing this out of spite or because of a tantrum. Doesn’t seem like a very astute reading of the situation. In fact it seems so obviously wrong that its not worth going into. I just ask people to think about it for a moment before assuming Amazon is just doing things willy nilly regarding one of its most important products. I’m not saying their doing it for reasons you’d agree with, but to say their having a temper tantrum . . .

I do find it highly amusing how many posters here are acting like Amazon is doing this out of spite or because of a tantrum. Doesn’t seem like a very astute reading of the situation. In fact it seems so obviously wrong that its not worth going into.

Oh, charming. “It’s so self evident that you’re all ignorant Macmillan controlled dick-bots, I’ll just insult you and move on — because you’re really too retarded to get it.”

Let me guess: You want to work in public relations for a large on-line retailer when you grow up?

Your suggestion that Amazon violated their contract by pulling Macmillan inventory was a new twist (for me anyway), but are you just speculating? If it is speculation then you shouldn’t have written that “…what it shows is that Amazon is becoming increasingly difficult and wild as a company for suppliers, not just publishers, to try to work with…”.

I hope this entire episode is actually REMEMBERED a year from now. Why? Because then we’ll have the data available (actually, lots and lots of data, which could be a problem) to actually decide who has been right and who has been wrong (with various shades of maybe thrown in). Will Amazon’s delisting of authors for an undetermined amount of time really cost them money? Or will ebook prices rise enough because of Macmillan’s actions cost authors MORE money in the long run? OR some other combination of the variables. There ARE lots of variables but there will be lots of data, so real conclusions will almost certainly be reliably established. Right now, EVERYONE is pretty much guessing, and as is typical in data poor situations, EVERYONE thinks they have a better grasp on reality so EVERYONE is pretty much being snitty toward those that disagree with them. This would make a GREAT research project for an SFWA intern, for example, or a senior thesis in economics for someone.
It’s always a bitch to be collateral damage, even if your side eventually does win the war.
Though it could be that this turns out to be a case of mutually assured destruction and EVERYONE, authors, readers, publishing houses, loses in the long run.
Personally, I don’t have much of a dog in this hunt for all sorts of reasons, but being a mean, author hating s.o.b. isn’t one of them.

Yes, your right about negotiations going back and forth, but it’s plainly obvious that the windowing (for Amazon only) proposal is put forth with tongue firmly in cheek. Macmillan is well aware that Amazon would not and could not ever accept that. It’s merely a tactic to make their alternate proposal look better.

You wrote, ” Well, if they own a Kindle, they don’t have a choice whether to boycott or not, do they?”

Wrong, and it’s a mistake I see a lot. When I bought my Kindle I was not required to turn in all my dead-tree books, nor was I required to sign a blood pledge that I wouldn’t buy any more. While I do prefer to buy e-books when possible (I travel a lot, and do not live in the US), ever since buying the Kindle I’ve continued to buy books in dead-tree format when they weren’t available in .azw or .prc formats. What Amazon has now done is to increase the number of books not available in .azw format. So I guess if this goes on, I’ll be buying more books the old-fashioned way.

If Amazon thought that this was a good scare tactic, then Amazon’s pretty dumb. Let’s assume the six major publishers control all of the market equally (a bad assumption, but it will make my point easier).

Ban one publisher: loose 1/6 of the market
Ban two publishers: loose 1/3 of the market
Ban three publishers: loose 1/2 of the market

Thus Amazon has banned themselves out of the book business, and their shareholders are thankful Amazon’s diversified into the lamp shade market.

I’m not saying the same thought didn’t cross my mind at first, but then I did the math. Of course, that may have intended it as a scare tactic, but didn’t think it all the way through.

Andrew Nicholson, even *old* used books have resale value. It was the 25% that was so funny. :)

If someone offers me a nice, shiny, well-looked-after copy of an in-demand book, say, Old Man’s War, that has a new price of $7.99, I’ll offer them a buck. And then I’ll price it at $4.

While a 400% mark-up might seem egregious, remember, we’re talking a gross of $3, out of which has to come rent, wages, utilities, blah blah blah.

And like Sargent at Macmillan said, it’s not really a growth sector. I can’t sell more books, so I have to try to get them for less. It’s the only area in which I have any real chance of reducing my costs.

I don’t buy my SFF books from Amazon in the first place (I get them from the lovely Borderlands Bookstore in San Francisco), but Amazon’s behavior has incensed me to the point I am now actively boycotting them.

I spent over $15,000 with them last year (granted, most of it in electronics and photo gear, not books), they can kiss that revenue goodbye.

Reading some of the angry and entitled douchebaggery in the comments over at the SFWA site, one thing strikes me: all those guys basically saying “If I can’t pay what I want, I’ll steal!” can’t exactly claim any moral high ground in this debate. They do know that, right?

As for me, I agree $14.99 is too high for a Kindle edition. In point of fact, $9.99 is too high. Come to think of it, 3¢ is too high. Why? Because I have this thing about actually owning what I buy. Call me crazy. I’m just old fashioned that way. And with Kindle editions, which come loaded with more DRM than Paris Hilton’s had yeast infections, actually owning your books just ain’t in the program. So yeah, hooray for dead trees. Pay once, read ‘em forever, and no political/corporate BS.

(And yes, I do find it funny that people who willingly paid $350 for that ugly-ass locked-down glorified PDA are grousing about an extra $5 for content.)

Abbie Normal: “Your suggestion that Amazon violated their contract by pulling Macmillan inventory was a new twist (for me anyway), but are you just speculating?”

They didn’t violate a contract exactly; they held inventory hostage. Amazon orders books from Macmillan and pays Macmillan a discount price for them that is placed on account, but the books aren’t sales yet. They are copies shipped. Amazon has a time period where if they have stock that they haven’t sold and they don’t want to keep it, they can return it to the publisher for a full refund from the funds they paid that were placed on account, shipped back at the publisher’s expense. Those returns are subtracted from the copies shipped which then gives you net sales. Net sales are what authors receive royalties on (called the sell through.)

So Amazon held Macmillan’s books that it had ordered in its warehouse and refused to sell them, and some, perhaps most, of those titles were still within the return time period and so were not yet net sales. But Amazon didn’t return them, sell them or remainder them. Amazon technically “owns” the books and so can have them in a warehouse. But because of the returns/consignment system, because of the dispute, etc., and yes, potentially because of the terms of sale contracts, Macmillan could make a very nice legal stink. At the very least, Macmillan could say that Amazon is turning down their right to return the books for refund and keep all of Amazon’s money for the copies shipped. (Which means Macmillan and the authors don’t lose the money, only Amazon does. Which Amazon would probably also attack with lawyers, etc.)

It’s a risky move. A far more effective threat is to say that you aren’t going to stock Macmillan titles, return all the titles that can be returned and don’t order any more, remaindering the rest off (possibly at a slight loss.) That doesn’t leave Macmillan with any claim to the inventory nor able to say that the returns are invalid, etc.
So it’s ballsy, the way they did it, because they were hoping Macmillan would give in like Hatchette did, and they’d still have their inventory. I.e. it’s wild and they are difficult. And this isn’t the first time they’ve done something like this in recent years.

Michael Kirkland: “but it’s plainly obvious that the windowing (for Amazon only) proposal is put forth with tongue firmly in cheek. Macmillan is well aware that Amazon would not and could not ever accept that. It’s merely a tactic to make their alternate proposal look better.”

Given that this was the main threat to try to get Amazon to agree to their terms, I don’t think Macmillan was joking about it as purely a feint. Publishers still think having a delay in e-book pub versus the print hardcover for major retailers can be a good thing, so if Amazon had refused, Macmillan could make good their window threat and it would have been fine for Macmillan.

The big issue was this — Amazon needs Macmillan’s bestselling titles in order to have inventory that draws buyers in. They can live without one publisher’s bestsellers, but it hurts them, and if the other big publishers try it too, it messes up their book business, which is their show business, and also their Kindle campaign to be a major player in online downloading (of which books are just one but a showy part of the market.) In return, Macmillan needs Amazon to be selling all of its titles because it is the major online retailer, and it is still the leading e-book retailer for the growing market. The question was how much does Macmillan need Amazon? And what Macmillan decided was that they don’t need Amazon that much and so set new terms in response to Amazon’s demands.

Which was huge, because Macmillan was saying to Amazon that you’re still the big kid on the block, but your monopoly is done and we’ll survive without catering to you. So Amazon decided to show Macmillan what it would be like if they had to survive without them at all. And Macmillan didn’t blink because it already decided Amazon doesn’t control enough of the market anymore.

Amazon is a very powerful retailer. But it’s lost its chokehold on the book markets. This is not necessarily a wonderful thing as a book-oriented retailer is a lot better than an electronics-oriented retailer. But it means that the market has changed. And blunt tactics like Amazon just tried are not necessarily going to be effective in those circumstances. Of course, they’re still doing it, so we’ll see, but they said that they accept Macmillan’s main terms.

@KatG: Windowing ebooks for all retailers would be a viable, if shortsighted strategy, but no major retailer could abide a window for them only.

Many people seem to be forgetting that while Amazon has said they will eventually capitulate, they haven’t yet. If you read between the lines, their “capitulation” is a signal to buyers that this will be cleared up soon, so they shouldn’t bother buying from some other retailer. Not that they’re actually going to, you know, put the books back up before they get a deal they like.

It’s still up in the air who needs who more. We’ll have to wait and see.

Um… My understanding is that something like 3/4 of all authors never make back their advances (at least under their publishers’ bookkeeping models), which means that what Amazon and MacMillan are doing won’t affect them at all.

Ann @107
Even for those that don’t make back their advances, there is the second-order effect that sales of existing books are a significant factor in current/future advances, as well as the decision whether to offer an advance at all.

And a large reason for the stink is that deadtree books have been pulled, and make up the vast majority of the sales and royalties of effected authors – ebook contracts between authors and publishers are of small immediate interest.

Right now, EVERYONE is pretty much guessing, and as is typical in data poor situations, EVERYONE thinks they have a better grasp on reality so EVERYONE is pretty much being snitty toward those that disagree with them.

Haha! I got a kick out of that; you’ve just described about half of the contentions I’ve seen on the internet.

One aspect of this discussion that I find fascinating is the question of whether ebooks will be available on the day the title releases. I think that if the publishers can’t get a higher price for ebooks they’ll just decide to push the release of those ebooks until later — they don’t want to cannibalize their own sales (a few publishers have already started to go this route).

So to me part of the issue is either get the ebook on release date for more or wait and get it for less. It looks like Macmillan wants to have a simultaneous release with a higher price point and then would likely drop the price (which is generally the same model for most physical books — you pay more to get the book earlier).

Which raises the question – for everyone who is adamant that the price of an ebook not rise higher than $9.99, are you willing to wait months after the physical book release to pay that price on a delayed ebook release? And if you are willing to wait, what’s the difference if a publisher wants to charge $15 for the ebook initially and then drops it?

Whether Amazon or Macmillan is, in the end, right about the e-book price point issue, may be a murky question. (Proven by the comment above that said flatly, of one outside observer, “He’s wrong” and then immediately followed it with “Just my opinion.” Cognitive dissonance are us!)

The real issue, as John has defined it in his post – cause after all, he gets to set the agenda on his blog – and the real issue for me, too, is Amazon holding Macmillan, and even its print books which have nothing to do with this, and its innocent authors and customers too, hostage in favor of its pricing position. That’s not leverage, that’s petulance.

John, you suggested that we should go out of our way to support Macmillan authors from other retailers during this crisis. Fine, but it occurs to me that I had no idea what Macmillan’s imprints are. I mean, I’d known that Tor had something to do with St. Martin’s, but when this crisis started it was complete news to me that either of them was owned by Macmillan. I don’t keep track of these high-level corporate mergers. So I rooted around a bit on Macmillan’s website and here’s the list of Macmillan imprints if anyone wants it handy.

“Wired’s proposal, which you were paraphrasing, is that Macmillan should come up with new ways to sell books, like a tech company, instead of dealing with technological issues in the current industry. Wired was proposing Macmillan be a creative tech company coming up with new tech solutions. Macmillan’s CEO was saying that this wasn’t a cost effective approach for them. So yeah, it is relevant.”

I don’t see how you get that from the excerpt that I posted. If you have a different quote, then I would like to see it, but from the stuff I read, the people at Wired were asking why Macmillan and publishers in general were reluctant to use the opportunities ebooks created in new ways to grow the business. I don’t see how you equate that to becoming a tech company. Some tech company already created the solutions: he/she/they just need to adopt and adjust to them.

And in response, the head of Macmillan said this:
“As the Internet grows, as all the other types of entertainment grow, it’s hard to imagine sitting here how we are going to convince everybody in this room to spend an extra six hours every week to consume another book. So in a way, if you look at the overall demand for books, it’s pretty hard to make that grow.”

That seems a pretty clear indication that he thinks books are not a growth industry. There was little hedging about how to make it grow faster than it currently is or any of the other “industry understood” things you said. That sounds very much to me like a man who doesn’t think he can grow his market under pretty much any circumstances.

All of which, by the way, is secondary to my point. You seem to think that I am arguing that the publishing industry must come up with its own technological solutions. I am not, and I don’t think that the Wired people were either. I am saying that Macmillan has a poor history of variable pricing on ebooks and that the head of Macmillan talks like a na who thinks he is in a stagnant industry. Combining those too facts, and it seems as if the agency model is pretty much nothing more than an attempt to soak the existing market for everything they can while it lasts AND, more importantly, to prevent retailers from coming up with business models that are outside the publishers control. It is that last that I have a problem with as a consumer and a reader.

A lot of people seem to think that it is an unalloyed good that Macmillan is moving to an agency model and allow the other big publishers to come along. I disagree because I think that such a model is a larger danger to the reading public.

At the end of the day I don’t really care whose behavior was putatively worse. In fact, I have already stated, multiple times, that Amazon;s behavior since the weekend has been unacceptable. But in the long term, Amazon and Macmillan are both corporations and both can and will continue to take advantage of their relative economic positions to screw authors and readers out of as much money as possible. My question now is which of the business models does the most to ensure books survive and grow. And I don’t think it is Macmillan’s.

Right now, EVERYONE is pretty much guessing, and as is typical in data poor situations, EVERYONE thinks they have a better grasp on reality so EVERYONE is pretty much being snitty toward those that disagree with them.

Haha! I got a kick out of that; you’ve just described about half of the contentions I’ve seen on the internet.

Internet hell; coolstar has just described what passes for political discourse in America today. ;-)

Okay, first — I’m a terrible person. I have not read every comment on every post you’ve made on the subject in the last week. I know that’s terrible, but there have been a whole hell of a lot of them, most saying the same…damn…things.

Just to provide full disclosure — I’ve been an Amazon customer since the time when they sent Christmas presents to all of their customers (hey, kids, there was a time when people thought the internet grew money like candy-trees!). I own a first-generation Kindle, but I’m not that thrilled with it. Honestly, I liked the Kindle app on the iPhone better (when I still used an iPhone).

So, anyway, I have to say that I come down on the “a pox on both your houses” side. Which sucks, because it’s boring. But seriously, these are giant corporate entities battling for things that don’t matter to us. And by “us”, I mean readers — despite some readers’ conspiracy theories, most of us here are not, in fact, authors…. Anyway, it’s not like Hotlzbrinck cares about books. They want to make money.

I realize that observing that corporations exist to make money is neither an insightful or important observation, but it is true. It’s not bad, either — ideally, that profit-seeking desire will lead them to publish books that we readers want to drain for all their succulent word…ness. You know what I mean.

Also, of course, I recognize that many of the people who are involved with publishing your books, whether they are you, your agents, your publisher (by which I mean Tor specifically, in this context), and even Macmillan or Holtzbrinck probably love books and want fluffy bunnies to sing them to sleep. Just because the corporate imperative is for maximum profit, doesn’t mean that individuals within the machine aren’t acting (at least partly) out of love.

I guess this brings me to “I Hate Your Arguments About Ebooks” (with apologies to, eh, I don’t know, some guy) — I’m going to limit myself to two here, but the flat out lies and flim-flam (yeah, I said it — flim-flam) I’ve seen on comment threads here and on other places just infuriate me.

First (and I know you’ve tilted at this particular windmill yourself, Scalzi, but damn! It’s tenacious) for #deity’s sake, it takes more than an author to make a book! I’m not going to go into why that is, but please read Cat Valente’s thoughts on the matter — she speaks sense, in more detail than our host has.

Second, please stop saying that the Kindle is a “closed” platform — it supports several open formats — including the ultimate one “.TXT” (for English language books at least — although it supports several other formats that support other languages). The Kindle as a device is not tied to Amazon’s business decisions. Yes, they’ve provided the greased path with their “Whispernet” (which is brilliant, by the way), but seriously, people! Getting other content onto it is no harder than syncing your fucking iPod!

Whew. Okay, that felt good. I do have other thoughts, but now that I’ve shoved this lovely knife into my spleen and let it vent, I suppose I’ll just go away now.

Kevin: Wired asked Macmillan’s CEO why they didn’t use “new ways” to grow the business, and what they mean by this is why aren’t you acting like tech companies with millions of dollars in capital, and massive R&D resources and millions of dollars in market research and advertising, and advertising revenue, and hundreds of products, and doing things the way they do because with e-books you now have a market that must be just like phone apps and so if you just try “new ways” won’t that grow your business exponentially because we the tech people will actually care about books and buy them if you sell them to us in the tech company ways which we are used to receiving. Wired is asking Macmillan why they are remaining a stogy old publisher instead of transforming themselves into the much sleeker, cooler electronics operandi. (Of course, the agency model comes from other retail and electronics companies. It is essentially a “new way” for publishers to grow the business through e-books.)

And what the Macmillan CEO is saying is not that his industry is stagnant but that it is not going to grow in that way, that if you do new ways, it’s not going to magically quadruple the demand for books. Book publishing is a boutique operation with mainly one product, no advertising revenue, that will continue to appeal to a minority of the populace. He’s saying that e-books are not a panacea, and they’re not. They are a great opportunity that will make a percentage of the population — the privileged percentage — more aware of books and will sometimes buy them, but they aren’t going to change the way that people buy books.

The conversations in the various threads have been interesting because not only were people complaining that they think e-books are cheap to produce — an error I already knew about — but I’ve learned about all sorts of other weird beliefs, (which I’m not saying you espouse Kevin,) such as:

That book publishing is dying. This one seems caused by the staff layoffs which happen during recessions, and Borders’ mismanagement leading to financial difficulty, but what’s happening now is that book publishing continues to have a slow rate of growth, has increased its youth market (future readers) by incredible leaps in the last decade, and the wholesale vendor market — which shrunk in the 1990’s and oughts — is now expanding again. And Apple and Sony and all these companies like us and want to help publishing sell things. They never liked us before.

That big publishers and big book retailers care nothing about books and only about making money. (Oh, if only.)

That big publishers and their authors have an adversarial relationship and that big publishers beat up authors and cheat them of their money and dare the authors to say a word. (Um, no.)

That big publishers will collapse and become smaller publishers (this seems to be confusion that publishers are like banks or possibly influenced by spiel from tech business gurus who are ironically using it to sell their books.) Oh, and that small publishers are sweet and wise people who give authors unicorns.

That because big publishers hire freelance copyeditors as contract employees so that they don’t have to pay them health benefits, that this somehow means publishers don’t do anything. (Apparently, the employees play ping-pong all day while counting all that money they make.)

That the solution to every issue in publishing is for authors to perform the work of the hundreds of people involved in producing and selling print and e-books or spend thousands hiring others to do it for them, then selling the books individually like one big craft fair, and that this will magically be efficient and successful. (This again may be coming from taking too seriously tech business gurus who again ironically are trying to sell books to the tech people, not authors, possibly some published by Macmillan.)

In reality, publishing will remain a narrow margin, low growth, highly visible boutique industry of varying efficiency and deep connections to schools and Hollywood, with large publishers, medium ones, and small ones. There was a flourishing self-publishing sector before the existence of the Internet, and there will continue to be one using both print and the tools of the Internet. Some self-publishers will sell lots of books and get offered reprint deals by publishers, which they may or may not take. Others will sell a few hundred copies, just like someone doing a small jewelry craft business. Print will not die. E-books will grow rapidly. Prices will vary, but will not be dirt cheap, and there will be lots of free stuff for promotion.

And publishers will work out and constantly adjust their operations with vendors, with different strategies used for different types of vendors — what is used with Amazon for e-books will not be what is used with Amazon for print books and with Barnes & Noble for brick and mortar stores. Some of it will work and some of it will not and require retrenching.

The agency model is used extensively in retail, including for electronic equipment. It does not render vendors helpless and many of Amazon’s other suppliers use it. If it’s not working for vendors and sales fall off because of it, they’ll change it, just as they’ve done with other systems before. You, the customer, were going to have to pay more for some e-books as soon as the market expanded, at least when they first came out, and less for other e-books as that expansion increased the number of titles available. So those $20, $30 e-books will be mostly gone. And Amazon, who was only doing the $9.99 dance on some e-books as a promotion, will now have new releases at a slightly higher price, which was again going to happen anyway. What Macmillan maybe gets from the agency model is not having to deal with the demands on wholesale prices of hundreds of different vendors, which ran up the price in many places, and it can drop the price below $10 as needed.

The idea that Macmillan is never going to do this is unlikely, especially as they’ve been laying out the whole sliding price scale in the media. Book publishing has never been able to seriously overinflate or undercut its prices because of how people buy books, narrow margins, etc. They know that people will only pay so much for books at certain times, and they can’t afford the losses of underselling like some other industries — music, Hollywood, electronics, Internet, etc. E-books were expensive because it was a tiny market outside of publishers’ usual operations that were very expensive to produce and had no decent consumer infrastructure. Now we’re getting more infrastructure, publishers and electronic vendors with platforms are finding ways to make production easier and cheaper, rights issues are being worked out, etc. It’s all very normal.

I’m glad to hear that Amazon got the titles back up. I suspect future developments in e-books will be less dramatic.

I doubt John is even reading comments on this thread anymore, but here’s my point of view.

I don’t believe the e-book “conspiracy theorists” who think publishers don’t care about readers at all. It’s silly to think that, because the readers are the ones who eventually buy both their print and e-books. There’s not some kind of secret conspiracy going on to “kill” e-books in order to protect paper books (and the paper book supply chain) for as long as possible.

On the other hand, as PNH says, publishers are still trying to develop the skill sets necessary to interact with readers as customers well, which has led to enough missteps and sour notes to give those conspiracy theorists plenty of material for their haywire mental pattern-matching algorithms to attribute to malice instead of incompetence.

For example, in early February 2010 as the Amazon/Macmillan kerfuffle was going on, when consumers were at their most concerned and uncertain over the future of e-books, Macmillan President John Sargent posted an announcement on the matter aimed at “Macmillan Authors and Illustrators”, calling Amazon “a valuable customer for a long time,” with not a word to concerned consumers for almost a whole month afterward until he made a post on the matter to his blog. This caused a number of those concerned and uncertain consumers to see red, as it seemed rather clear who Macmillan cared about and it wasn’t them.

So yes, I believe publishers do care about readers, but they haven’t been doing the best job of showing it. But if they keep trying, sooner or later they’ll do better.